But I think Tesla's critics ought to direct more of their
attention elsewhere, specifically on the electric car company's
board of directors. Where the hell are they amid all this chaos?

At least in theory, directors are shareholders' representatives
at the company. They're supposed to oversee management, in
particular the CEO, and look out for the interests of investors.
That means making sure the company continues as a going concern -
even without its charismatic CEO if necessary

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But if that's their job, Tesla's directors seem to be failing
spectacularly at doing it.

"The board has been worthless," said Lynn Turner, the former
chief accountant of the Securities and Exchange Commission, in
the wake of Musk's tweets about taking the company private.

And Musk appears to be a terrible manager. He seems resolutely
unable or unwilling to delegate to his underlings. He's been
known to
fire people on the spot. And worst of all, he keeps losing
top managers. Just on Friday, his chief accounting officer
resigned after only one month on the job and his head of human
resources declined to return after taking a personal leave.

Musk's actions have led to a roller coaster ride for Tesla's
investors. In the wake of his tweets about taking the company
private, Tesla's stock spiked to more than $380 a share. But
after it became clear that the funding wasn't exactly "secured"
in the common sense of the word, the stock fell hard. It
dropped even farther Friday after Musk's pot puffing video.

His actions have also put him and the company in real legal
jeopardy. His "funding secured" tweet has triggered an inquiry by
the Securities and Exchange Commission and a collection of class
action suits on behalf of shareholders. A pair of whistleblowers
have
filed complaints with the SEC alleging corporate misconduct.
And the cave diver is
threatening to file a defamation lawsuit against Musk.

Tesla's board has been out to lunch

One would think that amid all this Tesla's board might want to
try to take control of the situation. Another board at another
company might even think about firing a CEO who had been up to
half the antics that Musk has been up to recently. But even if
Tesla's directors weren't willing to go that far - the company is
basically a cult of personality, after all - they could have
publicly admonished him or docked his pay or forced him to bring
in a strong no. 2 to take over some of Tesla's day-to-day
operations.

caption

Kimbal Musk, Elon's brother, sits on Tesla's board of directors.

source

Fred Prouser/Reuters

It's pretty obvious that Tesla
is in dire need of management expertise, particularly from folks
who have experience in the mass production of automobiles. The
company required a monumental effort to produce some 53,000 cars
last quarter, even though that's about the same amount that
Toyota produces in a couple of days.

With Musk sleeping on floors at the factory and micromanaging
operations, it's clear that he's taken on too much at the
company. What's more, there a real - even if it's slim - chance
that the SEC inquiry could lead to charges that force him out of
the company. A prudent board would be preparing the company for
that possibility, at the very least.

Instead, the company's cozy club of directors, which includes
Musk's brother Kimbal, have done nothing of the sort. At least
publicly, Tesla's board appears to be doing little more than
sitting on its hands.

Tesla's board is "not only out to lunch, they didn't make
breakfast or dinner," Turner said.

There have been longstanding concerns about Tesla's governance

This is not a new problem. There have been longstanding concerns
about Musk's erratic behavior and dominance of Tesla - and the
board's lack of independence and oversight. This spring, the
board handed out a massive options package to Musk that could
eventually be worth $56 billion or more.

Tesla says seven of the directors on its nine-member board are
independent, but it doesn't take long to see that the board is in
fact a travesty of governance. One of the directors is Steve
Jurvetson, a longtime Musk friend and early investor in Tesla
(Jurvetson has literally been MIA on the board, having taken a
leave of absence since November in the wake of #metoo
allegations). Another director, Brad Buss, is the former CFO of
Solar City, the solar panel company that was run by Musk's cousin
and which Musk himself owned 20% of
before Tesla acquired it in 2016.

The board's behavior drew some scrutiny this spring prior to the
company's annual shareholder meeting in June. A union-affiliated
investment firm took aim at all three of the directors who were
up for election at the meeting, charging that they were
unqualified or were too close to Musk.

Its complaints were followed by big proxy advisor ISS, which
urged investors to withhold their votes from two of the
directors, and Glass Lewis,
which opposed all three. Both proxy services also encouraged
shareholders to back a proposal that urged Tesla to separate the
roles of chairman and CEO; Musk holds both titles.

But investors largely ignored the warnings and advice.
Shareholders voted overwhelmingly both to reelect the directors
and to reject the proposal to split the CEO and chairman roles.

One might wonder how investors might vote today if they had to do
it again. Because if it wasn't clear then, it is now - Tesla's
directors, for all intents and purposes, have failed to do their
jobs and the company and its shareholders are paying the price.